The Massachusetts Wage Act was first enacted in 1879 to ensure that municipalities paid “laborers” a minimum weekly wage. The Wage Act has been expanded over time to include all private employers, generally requiring them to pay employees’ wages weekly or bi-weekly. See G.L. c. 149, § 148. If employers fail to pay wages, the Wage Act provides for treble damages, and individual liability of certain corporate officers and agents. This law can provide major recoveries for employees owed back pay.
However, as the Wage Act evolves to meet the current realities of employer-employee relations, problems sometimes develop. A 2013 case illuminated — and resolved — one such problem with the Wage Act.
In Cook v. Patient Edu, LLC, an employee filed suit against his employer, a limited liability corporation (“LLC”), and two of the LLC’s managers. 465 Mass. 548 (2013). The employee sought more than $68,000 in back pay. A problem arose because the portion of the Wage Act that imposes personal liability for back wages does not explicitly list LLCs or their managers; the Act’s language focuses on corporate officers and agents. Accordingly, the trial court granted the defendants’ motion to dismiss.
On appeal, the S.J.C. acknowledged that the plain language of the Wage Act does not impose personal liability on LLC managers for missed wages. However, the S.J.C. looked to the legislative intent of the Wage Act to broaden its application and include LLCs: “We do not read these provisions of G. L. c. 149, § 148, as a legislative effort to single out for individual liability only the officers or managers of the specific types of entities mentioned in the statute.” Instead the naming of corporate officers provides illustrations of individuals who “may be deemed a ‘person having employees in his service’ under G. L. c. 149, § 148.” Cook, 465 Mass. at 553-54.
The S.J.C. held that a manager of a limited liability entity may be personally liable for the wages owed to employees under the Wage Act, “if he controls, directs, and participates to a substantial degree in formulating and determining policy of the business entity.” Id. at 556 (citing Wiedmann v. The Bradford Group, Inc., 444 Mass. 698, 711 (2005)).
Managers and employees of limited liability entities should take note of this case— especially since treble damages are potentially at stake. If you have questions about unpaid wages or other aspects of an employment relationship, contact the attorneys at Hutchins Law, P.C.